Ch 8 Macro
In a simple economy with only businesses and households, suppose that the sum total of all the goods and services produced during the relevant periodlong dashpairs of shoes, candy bars, digital devices, etc. all summed togetherlong dashis 430 trillion units. The total dollar value of this flow of output is $15 trillion. The total amount of factors of productionlong dashlabor, land, capital, entrepreneurship, all summed togetherlong dashis 0.7 billion units. What is the flow of incomelong dashthat is, the sum of wages, rents, interest, and profits? The flow of incomelong dashthe sum of wages, rents, interest and profitslong dashis
$15trillion
Using the expenditures approach to national income accounting, which of the following would be counted as investment spending?
A person in California buys a new house
Which of the following is a true statement about comparing world incomes?
Adjusting world incomes for purchasing power gives a more accurate view than using market foreign exchange rates.
According to the circular flow of income and output, which of the following is not true?
Goods, services and money all flow in one direction since money pays for the goods and services.
What is the difference between nominal GDP and real GDP?
Nominal GDP is measured in current market prices while real GDP corrects for changes in the overall level of prices from year to year.
Which of the following is the definition of personal income left parenthesis PI right parenthesis?
The amount of income that households receive before paying taxes
The adjustment in exchange rate conversions that takes into account differences in the true cost of living across countries is known as purchasing power parity.
True
Gross Domestic Product only includes "final" goods and services to avoid double counting. B. does not include transfer payments or financial transactions. C. does not include the transfer of second-hand goods. D. All of the above.
all of the above
If nominal GDP increases, it is possible that
any of the above might have happened.
To derive GDP using the expenditure approach, which of the following components are added togehter?
consumption expenditures, gross private domestic investment, government expenditures, and net exports
The problem with using foreign exchange rates to convert one country's GDP into dollars is that
not all goods and services are sold on world markets.
All of the following transactions are excluded from the measure of GDP except
paying your dentist to have your teeth cleaned.
The income households actually receive before they pay personal income taxes is:
personal income
When GDP is corrected to reflect constant dollars, this price-corrected GDP is called
real GDP
Gross output is
the total market value of all goods and services produced during a year by factors of production located within a nation's borders, including all forms of business-to-business expenditures and thereby double counting business spending across all stages of production.
The simple circular flow model shows that
total income received by households must be equal to the dollar value of all goods and services produced.
The difference between real GDP and nominal GDP for the same year reflects the amount of inflation that occurred during that year
true
The dollar value of total output is always equal to total income.
true
